WTO Members Consider Sustainability of Palm Oil Trade and Production

WTO members discussed concerns over the sustainability of palm oil production and trade at the 15 May meeting of the Committee on Trade and Environment. Delegates from both exporting and importing economies highlighted the need to safeguard the environment while exploring the sector’s employment and growth opportunities.

Colombia kick started the discussions with a presentation of its policies and practices to avoid deforestation and enhance biodiversity synergies in oil palm plantations. A recently concluded pilot project has generated a wealth of information and experience on how better planning along with the adoption of landscape management and other agro-ecological practices can contribute to sustainable oil palm production, the representative said, adding that the environmental footprint of palm oil depends on where and how the crops are grown.

Malaysia pointed to its commitment to maintain more than half of its land mass as forest cover and said that its palm oil industry is well regulated. Export certifications have helped strengthen compliance with environment regulations. Malaysia further added that by January 2020 all Malaysian palm oil will be required to be certified. Ecuador also cited environmental licensing as a tool towards sustainable palm oil production. In Ecuador, small producers with less than 50 hectares of cropland make up the bulk of palm oil production in the country, providing 150,000 direct and indirect jobs including for vulnerable sectors of the population.

The European Union welcomed the exporting countries' commitment to strengthening sustainability in palm oil production. The issue is complex, the EU said, noting that palm oil production is a source of growth and employment but also faces challenges concerning deforestation, biodiversity loss, greenhouse gas emissions, and water management. The EU said it stands ready to work with producing countries on the issue.

Switzerland affirmed that trade policy can be used to address sustainability concerns. For example, there are provisions in the Indonesia-European Free Trade Association Comprehensive Economic Partnership Agreement that condition preferential tariffs for palm oil on compliance with labour and environmental requirements, Switzerland said. It further cited sustainable trade projects it undertakes with Colombia. Sri Lanka noted that the discussions on palm oil in the committee illustrated the importance of ensuring a proper balance between environmental and trade concerns.

Besides the discussion on palm oil, members heard presentations on New Zealand's work to craft a new comprehensive trade strategy that works alongside other policies for supporting sustainable and inclusive economic development. Canada and the European Union explained their efforts to support climate action through the EU-Canada Comprehensive Economic and Trade Agreement (CETA). As part of CETA's implementation, the EU and Canada had decided to step up the role of the Paris Agreement on climate change in their bilateral cooperation under CETA with a view to promoting mutually supportive trade and climate change policies.

Australia, the chair of the Environmental Goods Agreement negotiations that aim to eliminate tariffs on a broad range of environmentally friendly products, affirmed that the EGA would help to advance increasingly important environmental and trade goals, while noting that parties to the talks continue to consider how to make progress. Eighteen participants representing 46 WTO members had been engaged in the negotiations as of 4 December 2016, when ministers and senior officials had last met.

New Zealand renewed its call for members to support efforts for fossil fuel subsidy reform and briefed delegates on a side-event held back-to-back with the committee meeting in cooperation with UN Environment to discuss the newly agreed interagency methodology for collecting fossil fuel subsidy data.  The International Organization for Standardization, Convention on International Trade in Endangered Species of Wild Fauna and Flora, and observer organizations briefed members on their recent work as well. Canada informed delegates of the side-event they would be holding the following day in cooperation with France on Trade and Climate Change.